May 23, 2022

Learning More About Credit Counseling

For people who are frequently making monthly payments late, or not at all, and are receiving phone calls, bills marked ‘overdue’, and other harassing contacts, credit counseling might be the answer. This counseling is conferring with a company that is well versed in the area of bills, credit ratings and payment arrangements and who can offer a solution to the problem. This is an excellent solution for people who simply do not know what to do next.
Credit Counseling

Doing some self-analysis of one’s financial situation is imperative to see where the debts are and determine the severity of the situation. Having a number of credit cards, some that are maxed out, car or house payments that cannot be met, miscellaneous bills, missing utility payments in order to cover something else, are all signs of the need for credit counseling. It is at this point that one realizes something must be done if the family is to┬ásurvive.

When conferring with a company who has this experience, they will usually advise entering a Debt Management Program (DMP). After reviewing one’s debts and income, an experienced counselor will contact the creditors and explain that a plan has been developed to pay off the debts. A good company can usually convince the debt holders to make some concessions, such as reducing interest rates, forgiving late fees, all of which, in some cases, will reduce the total amount due.

With this kind of an arrangement one payment a month will be made to the counseling company and they, in turn, will make payments to the creditors. When entering into such an agreement, it is extremely important to check out the reliability of the company. There have, unfortunately, been some scams in the market place where the creditors were not paid, only making the situation for the debtor worse.

These payments, to the credit counseling company, must be made on time. If that payment is late then the payments to the various debtors are late, which is not received well, especially if they have made concessions to give a person a break. Being consistent and making prompt payments will improve one’s credit score considerably and improve chances of obtaining credit in the future, after the DMP is completed.

With the large number of credit counselors available today there are certain services that should be checked out before making a selection. A good company will look over all the information and offer budget management and saving advice. They will lay out a DMP that one can live with and see light at the end of the tunnel.

Other things that should be offered are free information regarding their services, what the monthly or set-up fees are, and a written contract that will spell out what will be done and what one can expect. Regarding the contract, one should take time to carefully read it before signing. Making sure a credit counseling company is licensed to practice in the state is also important and will assure a person they are in good hands.

Credit counseling companies are not supposed to be just for people who are in debt, they are supposed to help people who want to avoid falling into the debt trap as well. Although very few people seek them out for this purpose, a good company will have that service available. Many people have found that credit counseling is the solution for their overwhelming debt problems.

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